U.S. stock market looks to data-diversion

ISM and payrolls could bring focus back to U.S., analyst says

By

KateGibson

NEW YORK (MarketWatch) — The U.S. stock market in days ahead will get first takes on the U.S. economy in February, which may or may not end Wall Street’s fixation on upheaval in the Middle East and North Africa.

“The market is still focused on the Middle East and the chaos that is happening there,” said Burt White, chief investment officer at LPL Financial of the political unrest that had the price of oil surging and U.S. stock indexes registering their first weekly decline in four.

That chaos was most recently in play in Libya, where antigovernment demonstrators faced violent crackdowns by pro-government mercenaries and security forces.

Fears that the upheaval could spread from the oil-rich North African nation to larger producers like Saudi Arabia had crude-oil futures
CLH11
briefly spiking above $100 a barrel last week in New York, and fueled worries the resulting rise in fuel prices would curb economic growth.

“There is a real impact to consumer spending as well as profit margins to companies, we can sustain $100 oil for a few weeks or even a month or two, but not indefinitely,” said White, who also notes the rise of other commodities, including agricultural goods.

Data-driven?

But the week ahead could well decide the direction the U.S. stock market will take in the months ahead, given it brings U.S. economic data offering the first reads on February, said White, pointing to Tuesday’s Institute for Supply Management, or ISM, report and Friday’s nonfarm payrolls.

“Will ISM and payrolls be the elixir to divert the market’s attention from the Middle East to the U.S.?”
Burt White, LPL Financial

It was those very reports that last summer that diverted Wall Street’s attention away from Europe’s sovereign debt trouble and back to the building strength of the U.S. economy, White said.

“It completely put Europe on the back burner and set the stage for the rally we have now. The big questions for the market now are will the Middle East be 2011’s Europe, and will ISM and payrolls be the elixir to divert the market’s attention from the Middle East to the U.S.,” said White.

Beyond the economic data that starts Monday with personal income and consumer spending reports for January, the week ahead also has 13 S&P 500
SPX, +0.01%
companies scheduled to report quarterly earnings.

The reports ahead offer heavy representation from the energy and natural-resource sectors, as well as retail.

Of the 475 companies in the S&P 500 that have reported earnings to date for the fourth-quarter of 2010, 71% have posted results that beat Wall Street’s expectations, according to Thomson Reuters analyst Christine Short.

Estimated share-weighted earnings for the S&P 500 stood at $214 billion as of Friday, above the prior week’s $213 billion.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information.
All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only.
Intraday data delayed at least 15 minutes or per exchange requirements.